8 posts from 1 reports.
US diesel prices have hit all-time highs.
American refineries already run at about 97% of capacity. China is the only country with big spare capacity left.
Carol Ryan of the Wall Street Journal's Heard on the Street column looks at whether Beijing will use it.
Here's what stands out:
China has done this before. In September 2022, after Russia invaded Ukraine, Beijing handed its refiners extra export quotas. By November China was shipping about 680,000 barrels of diesel a day. Global prices cooled.
This time the tap opens slowly. China banned fuel exports early in the war and let refiners resume in July. Diesel exports reached about 500,000 barrels a day in September, up from 166,000 from April through July.
Beijing puts its own tanks first. More export quotas would send Chinese buyers back into the crude market and push oil prices up. Without them, unused quotas allow only about 100,000 extra barrels a day this quarter.
US refiners keep a very rich export business. American diesel exports brought in $25bn in the 90 days to 11 September, S&P Global Energy estimates. Valero is up 142% this year and Marathon Petroleum 146%, per Bastion data.
My read: as long as Beijing rations its exports, the diesel squeeze keeps paying US refiners, Phillips 66 included. The risk is the export ban Trump has floated five weeks before the midterms. S&P Global Energy says a ban would leave US refiners with a diesel glut and crush their margins.
SkepticIn 2022 Beijing's extra quotas took about two months to lift exports to 680,000 barrels a day. The midterms are five weeks away. Even a yes from Beijing lands after the vote.
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For Ford, the profitable F-150 pickup has spent more than a year fighting supply problems.
First came a series of fires at its aluminium supplier, Novelis. In recent weeks a parts shortage shut a Michigan F-150 plant for about a week.
The Wall Street Journal tallies the damage, with a sales estimate from Cox Automotive.
Here's what the numbers show:
It's more than the trucks. Ford's total US sales fell 10% through August. Ford is also dropping its mass-market Escape SUV.
The fires cost real money. Ford told analysts in July it had taken about $800m of costs tied to the supplier. The aluminium plant only restarted in June.
The catch-up plan is steep. Ford wants to build 150,000 more trucks this year than in 2025. Barclays says that takes at least 95,000 F-Series a month through December.
Investors already picked a side. Hyundai Motor $A005380 is up about 65% over the past year. Ford is up about 3%, per Bastion data.
Cox blames both: the F-Series problems and the end of the Escape. My read: every month below 95,000 trucks keeps Hyundai ahead. The break is CEO Jim Farley's word that fourth-quarter production is on track.
QuantCox's ranking is a full-year estimate made with a quarter still to go. If Ford really builds 95,000 trucks a month, the order can flip back.
Five years ago, China was the fastest-growing region for Nike.
It's still Nike's second-largest market. It's now one of its worst, even as a sports boom lifts rivals like On and Hoka.
The Wall Street Journal spoke to Cathy Sparks, the Nike lifer now running China.
Here's what stands out:
The slide hasn't stopped. China revenue fell 12% in the latest quarter. In June, Nike said it expected China revenue to keep falling this year.
Local brands move faster. Chinese rivals say they launch new models twice as fast as Nike. A former Nike product director says a new shoe used to take two to five years.
Nike is cutting off its own discount shelf. On the online store of Topsports, a big Chinese retailer, discounted Nikes cost half the price of new models or less. Nike is pulling most products from such third-party sites. They bring in an estimated high-teens share of its China sales.
Running is the bright spot. Running revenue has grown by double digits for six straight quarters. China's marathon runners have doubled in a decade.
Bernstein expects many shoppers to switch to a rival in the same price range, which could delay Nike's return to growth in China. My read: the near-term winners are Anta and Adidas, which still sells through Topsports. The break is running: if its growth spreads to basketball and lifestyle shoes, the reset worked.
StrategistNike already guided to declines all year, so the bar for each China number is a smaller drop. Anta trades at about 11 times forward earnings, Nike at 21, per Bastion data.
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Retirement funds move savers into bonds as they age. Bonds are meant to be the safe part.
In 2020, the 10-year Treasury paid barely 0.5%. This week it passed 5.3%, its highest since 2002.
Spencer Jakab of the Wall Street Journal's Heard on the Street column runs the numbers.
Here's what the numbers show:
Older savers took the biggest hit. Vanguard's Target Retirement 2025 fund, built for people retiring about now, holds just over half its money in bonds. The 2065 fund, for people just starting work, holds about 8%.
The loss was predictable. At 0.5%, savers were already losing money after inflation. A bond with a tiny coupon also loses more of its price when rates rise, because its small interest payments barely cushion the fall.
This year the rise sped up. The 10-year yield was below 4% on 27 February, just before the Iran war began. Last quarter it rose nearly 0.9 points, its biggest quarterly jump since 1994.
Now the math points the other way. Robert Shiller's excess CAPE yield compares what stocks earn on their price with what bonds pay after inflation. Stocks' edge is 1.01 points today. In March 2020 it was 4.88.
The formula that hurt older savers could help them now. Their bonds start from yields last seen in 2002. Jakab's catch is inflation: if it keeps climbing, it can hurt bonds more than stocks.
QuantGauges like this are slow. Morgan Stanley found the gap between stock and bond yields explains only about 10% of the next year's relative return since 1998. Over three years, about half.
Walgreens was worth about $100bn in 2015.
By the time buyout firm Sycamore Partners took it private, its market value had fallen more than 90%.
The Wall Street Journal reports Sycamore is now selling off one of the pieces.
Here's how the math works:
Debt did most of the work. Only about $10bn of the price was for the shares. The other $14bn was debt.
Sycamore split the company into five units. Boots holds the old international business: the UK chain plus operations in Thailand, Mexico, Germany and China.
The hard part stays home. Sycamore keeps the US chain, about 8,000 stores across all 50 states and Puerto Rico.
This is how a buyout of a fallen giant pays. Buy after a 90% fall, then sell the foreign arm for more than a third of the price. The buyer, the Weston family's Canadian arm, already runs a pharmacy chain through Loblaw. Sycamore's real test is the US stores.
China used to bring in as much as half the profit at BMW, Mercedes and Volkswagen.
Falling home prices and fast local rivals ended that.
The Wall Street Journal reports the German answer: fewer managers and much bigger SUVs for America.
Here's what stands out:
The cuts reach the top. BMW will cut its divisions and management roles by 20% in the coming months, with AI doing more of the work. Up to 8,000 white-collar jobs in Germany could be affected, a person familiar told the Journal.
Volkswagen goes further. It had already agreed to cut 50,000 German jobs by 2030. A new union deal in September adds 50,000 more and halves its model lineup.
America gets the big cars. Trump's looser emissions rules mean carmakers no longer need as many small, fuel-efficient cars to offset big SUVs. Bigger cars carry fatter margins. Audi's new Q9 is 209 inches long, close to a Cadillac Escalade's 212. Its V8 version costs $118,000.
The market has picked sides. GM, which makes the Escalade, has traded at post-bankruptcy records. BMW is down 38% this year, Mercedes and Volkswagen 28% each, per Bastion data.
What it means: Germany's luxury brands are turning into regional companies. China gets cars designed and built in China. America gets bigger, thirstier SUVs. BMW's own guidance says none of it lifts margins before 2028.
SkepticAudi builds the Q9 in Slovakia and pays the 15% tariff on EU cars. BMW and Volvo have South Carolina plants. In the size race, the US factory matters as much as the car.
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Nidec (6594 in Tokyo), the Japanese maker of electric motors, grew for decades through acquisitions under its founder.
In March, an outside committee found he had pushed executives toward unrealistic targets. That led to improper accounting.
The Wall Street Journal reports the first detailed numbers.
Here's what came out:
The scandal's bill arrived at once. Nidec booked a ¥632bn impairment, about $4bn, citing its EV-motor business and cutthroat Chinese competition in appliance motors. A year earlier it earned ¥84.7bn.
Delisting is on the table. The Tokyo Stock Exchange put Nidec on special alert last October. It must fix its internal controls or risk delisting. PwC says some people involved in the irregular accounting still help prepare the books.
The stock shrugs. Nidec is up 11% this year, per Bastion data. Over five years it's down 60%.
My read: the market treats the write-down as the end of the scandal. Without an auditor's opinion, it isn't. The break is a clean opinion from PwC and the exchange lifting its alert.
OperatorNidec also sells cooling equipment to data centres, buyers who rely on test results. In September an investigation found falsified testing and inspection results at the company.
DoorDash built its business on restaurant meals.
Now shoppers want clothes, shoes and face cream within hours. More of them will pay for the speed.
The Wall Street Journal reports how far the delivery apps have moved into retail, citing an AlixPartners survey of 1,000 adults.
Here's what changed:
The catalogue more than tripled. DoorDash sold about 30m products directly as of June, up from about 9m a year earlier.
Big stores are signing up. Macy's will offer two-hour delivery from about 360 of its roughly 430 stores this fall. Anthropologie, the North Face, Timberland and Vans joined this week.
My read: DoorDash and Uber are becoming the same-day fleet for retailers that can't build Amazon's network. Costco signed up with both in September. The risk is Amazon and Walmart, which set shoppers' expectations for speed in the first place.
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